Trades at Gikomba market going about their business. [Edward Kiplimo, Standard]
The Kenya Revenue Authority (KRA) collected Sh200 billion more in taxes in the first six months of the current financial year as the taxman looks to surpass its target for the second consecutive year.
Exchequer releases from the National Treasury show that KRA collected Sh868.3 billion between July and December 2021 compared to Sh668.7 billion in the same period of 2020, pointing to economic recovery after a tumultuous period in which the business environment was clouded by the negative effects of Covid-19 pandemic.
KRA Commissioner General Mburu Githi said the improved revenue performance was enhanced by the sustained implementation of key strategies as enshrined in their latest corporate plan.
“Some of the strategies include extensive use of data and intelligence to unearth unpaid taxes, use of technology to simplify tax processes, taxpayer engagements and education, customer support programmes; which have led to improved voluntary compliance and tax base expansion which is aimed at on boarding taxpayers previously not paying taxes,” said Mburu.
In addition to exchequer taxes that include PAYE, corporate income tax, value-added tax (VAT), customs and excise duty, KRA also collects other taxes such as railway development levy.
As a result, it collected Sh976.66 billion in the period under review.
This was against a target of Sh929.127 billion thanks to higher tax compliance.
Customs revenue
The best performer was customs revenue from which the taxman netted Sh355.8 billion, an increase of Sh33 billion against a target of Sh322.7 billion.
It is yet another record for the taxman, which for the first time in eight years, beat its target for the financial year that ended June 2022, earning the praise of President Uhuru Kenyatta in his State of the Nation Address in Parliament in November last year.
“For the first time in eight years, KRA has exceeded its revenue collection target despite the Covid-19 stress on the economy. The KRA projected a Sh1.52 trillion collection in tax during 2020 they collected Sh1.67 trillion, which was in excess of their projected intention,” said Uhuru.
Churchill Ogutu, an economist at Mauritius-based IC Asset Managers, the 24 per cent year-on-year jump in December reflects the recovery last year that underpinned tax collections.
“December is one of the months where tax receipts are usually elevated due to the statutory instalment payment regime, more so for the income segment,” said Ogutu.
Domestic taxes performance improved, with a 30.8 per cent growth compared to a similar period last year, with the tax agency collecting Sh 618.3 billion against a target of Sh603.9 billion.
All the domestic tax heads including PAYE, VAT and corporation income tax surpassed their targets.
The second half of 2021 was generally one of recovery with businesses picking up after President Uhuru Kenyatta lifted the dusk-to-dawn curfew, a move that might have pushed up sales of alcohol and hence excise duty as well.
During this period, data shows that economic output picked up, with a lot of sectors rebounding.